CU Mag: What did your family think about moving to Australia?
Sponem: My husband’s initial reaction was to think about all of the things we’d have to make happen to be able to do this. I tend to not think about that; I figure out the details later. Once he went through all of the details he became very excited.
The kids were excited right away [Sponem has three children]. Our middle child, who’s 11 years old, told me, “I’m really looking forward to seeing what it’s like being the new kid.”
After it was over, they all wanted to stay. They embraced the culture and made tremendous friends. On the way home, my eight-year-old said, “Mom, I never thought it could have been this good.”
CU Mag: What are some differences between U.S. and Australian credit unions?
Sponem: Credit unions there are taxed, and the marketplace is dominated by four large banks.
There are a number of differences, and my intent is to let readers draw their own conclusions. Even with a focus on providing a high-value member return, Australian credit unions have reluctantly introduced several fee structures out of necessity. This has been largely driven by taxation and significant decreases in interchange fee income. For example, mecu charges consumers $1.65 per month to use its debit card.
Operating in a bank-like environment creates the need for credit unions to think more corporately. It’s a harsher environment to operate in, and credit unions that don’t rise to the occasion become merger candidates. In a taxed situation, where 30% of what would go into reserves disappears, the focus on growth and profitability is intense.
There’s one prudential regulator and one set of laws for banks and credit unions. In the U.S., we should be glad we have our own regulator. If a credit union in Australia loses money for more than one quarter, the regulator requires a capital restoration plan. If the credit union doesn’t turn it around quickly, the regulator suggests a merger partner.
I asked a regulator in Sydney if he was concerned about the declining number of credit unions. He said, “That’s not my concern. It doesn’t matter to me if there’s one credit union or 100. I just care about safety and soundness.”
Regulators have no vested interest in seeing the credit union movement survive. People would tell me behind closed doors that it would make the regulator’s life easier if there weren’t any credit unions—it’s more work to make sure 100 credit unions are safe and sound than 25. That’s scary for consumers.
In addition, many board members are paid—anywhere from $20,000 to $140,000 per year. This is more common among large credit unions.
In Australia, board requirements are stringent in terms of education, understanding of rules and regulations, and risk management. So it makes sense to pay directors if you’re going to require that kind of time commitment. Board chairs get paid more, which makes that position a little more political.
Next: What are some differences in products?
Bill Merrick is deputy editor of Credit Union Magazine. Follow him on Twitter via @CUMagazine.